Ramit Sethi’s 8 Controversial Takes That Can Help Make You Rich

©Ramit Sethi

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Ramit Sethi has always loved stirring the pot and poking conventional financial advice. 

In an August 2024 YouTube video, Sethi rounded up eight of his “controversial” financial takes. Not all are pitchforks-and-torches controversial, but if nothing else, Sethi forces you to confront assumptions you may not realize you’ve been making. 

Try on these eight perspectives about money and decide for yourself whether they resonate.

Also see why Sethi says dreaming big is important when building wealth.

Focus On Major Rather Than Minor Expenses

Sethi argues that your budget and financial goals aren’t being sunk by splurging on a $5 latte or much-maligned avocado toast. 

Instead, people should focus on the big picture of their finances. Optimize for what Sethi called $30,000 numbers, including your savings rate, investment rate, asset allocation and debt payoff horizon, rather than denying yourself the occasional small pleasure.

Not Everyone Needs a Formal Budget

Budget spreadsheets can be useful to the extent that they inform your spending decisions and help you save more money. But they can also make you beat yourself up over and over, according to Sethi.

Many people don’t bother with formal budgets at all. Sethi doesn’t. Instead, Sethi said to focus on four key numbers — fixed costs, savings rate, investment rate and guilt-free spending — and aim to constantly improve them. 

Credit Card Points Can Backfire

Too many Americans chase credit card points and unthinkingly use them as a justification to spend more than they should with their credit cards. 

They’re a classic example of gamification, and it can be addictive. Card companies wouldn’t offer cards with points if they didn’t cause more spending than the companies pay out in rewards. Think twice on that before whipping out your credit card next. As Sethi said in the video, “Credit card points are not the ultimate goal of money. Living a rich life is.”

Don’t Pay an Advisor a Percentage of Your Portfolio

You can get great advice by paying a financial planner or advisor by the hour or a flat fee. But many advisors, Sethi said, charge you a percentage of assets under management. He used the example of an advisor charging 1% of assets under management. While that may not seem like a lot, it can add up because it gets compounded every year.

Sethi is a proponent of having an advisor if needed but said most people can likely manage their finances on their own. “If you want a second set of eyes, you want to get a financial advisor, I’m all for it,” he said. “However, pay them a flat fee or pay them hourly.”

Investing Is Actually Pretty Simple

Sethi said investing is like watching paint dry. If you put your money in and let it sit there for decades, you can become wealthy. It’s when people try to make it complicated, by timing the market for example, that people can lose money.

Invest in low-cost index funds and call it a day. As Sethi said, “Real investing is low-cost and long-term investing — things like index funds.”

Houses Aren’t Always Good Investments

Housing is a living expense, not an investment. It costs you money every month, and it doesn’t generate income (unless you house hack). 

Don’t justify overspending on a home by telling yourself it’s an “investment.” In fact, in some markets, it makes far more sense to rent. Sethi suggested running a buy versus rent calculation before deciding to buy a home.

Prioritize Your Savings Over Your Kids’ College

Too many parents put money toward their kids’ college education when they themselves have fallen behind on their finances and retirement savings. 

Your kids have dozens of ways to pay for their college education. You have only one way to pay for your retirement: your own assets (with a little supplemental help from Social Security). 

A More Equitable Society Matters

Sethi argued that more of our conversation around personal finance should zoom out to the societal level. He said we criminalize the poor and idolize the rich. “Poverty, social mobility, is something that we don’t talk about enough when it comes to personal finance,” he said.

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